Transcript from our video discussion regarding the demise of the cookie with Dan Scudder, CEO of Highland Math; Todd Dziedzic, SVP, Digital & Analytics at V12; and V12’s President, Anders Ekman. Video links can be found below.
Hello. This is Anders, President of V12. Welcome to another session in our series of Next Best Action video discussions, talking about the important themes in the world of marketing.
I can’t think of one that is more important with more dollars on the line and more confusion, than the demise of the cookie, which has fueled the programmatic ecosystem for a long time.
As many of you know, Firefox and Safari long ago stopped using a cookie as an identifier – that’s only a relatively small proportion of the online traffic out there that advertisers try to target.
But now, with Google shutting the cookie down in about 18 months’ time, marketers must deal with a very different world. Joining me to talk about this today is Dan Scudder, CEO of Highland Math and Todd Dziedzic, who is SVP of Digital and Analytics at V12. So guys, thank you very much and appreciate your joining.
Dan, tell us a little bit about Highland Math, your business, and some of your observations around the shutdown of the cookie.
Thank you for having me. So, as you mentioned, I’m CEO of Highland Math. We’re a data monetization service provider, working with companies who own data assets. Often companies who aren’t in the data business such as publishers, retailers or financial companies have interesting data assets and want to monetize those in the advertising ecosystem.
Increasingly, what we’re seeing is a need for first party data owners to get more value from their own data. They can do this by matching it with identity graphs to allow the data to be shared and get value.
Prior to this, I spent many years at Liveramp and gained a ton of familiarity with the ad tech ecosystem, the cookie and the identity graph space. We’ve seen a shift over time from ephemeral cookies which are now officially in decline to other forms of first party identifiers such as an email hash.
Todd, tell us a little bit about your background and your role at V12 and how all of this is affecting what you do.
I started with V12 about three years ago and we really began looking at our programmatic strategy. We saw a need for custom audiences and the ability to leverage our consumer database to create scaled audiences for the digital ecosystem.
Let’s talk about marketers and how this is all going to affect them, because it strikes me that we’re going from a period of, believe it or not, relative certainty, into this great period of uncertainty. So, Dan, what do you see marketers doing and how are they reacting?
I think there’s two changes that are happening. One is the decline of cookies, which, in some ways, is unfortunate. Because these third-party cookies form the identifier that marketers have used to standardize all their advertising systems and technology tools. However, cookies weren’t necessarily the best mechanism to do what these advertisers wanted to do. Cookies were clunky and didn’t operate very well between systems.
What we’re seeing now is a shift to a more addressable advertising format, which seems to be the email hash or an encrypted version of an email. These are the foundations of an identity graph so this is actually going to be much easier to use technically than the cookie capability that existed before.
One of the things that I’m seeing, to pick up on one of Dan’s points, is the splintering of a relatively few identity graphs and systems of consumer identification to a lot of them. Are you seeing that too, and how is this whole splintering function manifesting itself in your work?
We see a few players out of the gate who can use first party data to convert to a consumer ID. They seem to be popping up weekly and I don’t think that’s an exaggeration.
V12 identifies people both through the mailbox and the inbox and we are able to use consumer IDs to make audiences and taxonomies available to brands and publishers.
Publishers are seeing the same sort of thing. The New York Times announced they are removing third party cookies entirely. Instead, they’re going to offer a taxonomy that advertisers can bid on based entirely off of their registration data. They have about 46 different audiences. They’re looking at the value add of converting to a unique consumer ID, which the demand side can then match to. Does it really help monetizations or are they better off providing a syndicated taxonomy to their users to be more profitable?
For several years, we’ve seen Amazon and Facebook as the big walled gardens. We are now seeing smaller walled gardens, like the Times and other innumerable publishers enter the market. This is enormously confusing. It throws off bidding algorithms.
It creates this confusion among marketers and they’re not quite sure where we’re at and they can’t quite trust the system that they had gotten comfortable with over the last few years.
Dan, I don’t know if you agree or disagree with that, but it sure seems confusing to me.
I completely agree. I think we’re in this transitional period where the system of record that marketers used provided scale. It could have been clunky in certain ways to provide this scale and a way to advertise but that’s going to transition to new methods. Like Todd was talking about with the New York Times, you will see more and more publishers collecting more first party data, asking for consumers email addresses which enables marketers to directly match with their audience and do campaigns. There’s going to have to be a new breed of technologies that facilitate that type of advertising transaction.
Like you said Anders, this leaves a lot of uncertainty in the plans for marketers going forward.
So, I know the two of you had spent a little time framing out the options here, the systems and methodologies that are now pushing their way into the vacuum being left by the cookie over the next 18 months. Todd, do you want to start describing that framework?
In general, one theme is how to use first party cookies and first party identification to convert to some sort of unique consumer ID. The thought is that there will probably be less scale but higher quality with this option because matches are being made on richer data elements than a cookie.
Then there’s the browser-only approach. So, for example, using Google’s Privacy Sandbox, if a user has search history in the browser, the consumer who launches that browser can decide to use this history to allow brands to decide whether or not they want to put an impression in front of them. That has really powerful privacy-sensitive attributes, but it ignores a lot of the benefits that many of the marketers like about digital advertising, which is being very specific on the types of customers that they want to promote to and to control that decision of whether the impression should be there or not. This idea does get some traction because people really love the consumer being in charge of their data, which is a theme that we’ve seen grow since GDPR.
Then there’s this third way that I’ve seen get a lot of steam which is creating an aggregate digital identity, if you will. For example, if you think of zip plus four in the physical world, it would be doing something similar, in aggregate, in the digital world.
So you’re not actually using any one particular consumer’s individual data, but you’re specifying that in this group of 100 or a thousand or whatever it is, 20 or 30 of the customers that you specifically want to talk to will be reached. This can also get around the privacy issues because you’re not using anyone’s individual data directly although you’re not as targeted as 1 to 1.
If we’ve overstated the accuracy of the cookie in the past, some think this aggregated option might actually get you the same accuracy you were getting before but in a privacy-sensitive way. I think that may be a bit of a leap. We can’t as an industry be talking about cookies as a way to get to 1 to 1 and personalization and then suddenly, when it’s convenient, start to throw it under the bus and say, I always sort of exaggerated the functionality. The truth is somewhere in the middle.
There’s this tension between the privacy needs of consumers and the sort of targeting that is most effective to meet the needs of marketers. I think the arbiter at the end of the day will be the browsers who can enforce different privacy standards technically or from a policy perspective, and also provide alternatives, like the Google privacy sandbox.
Dan, as one of the co-founders of Liveramp, even though you’ve been gone for a while, they obviously cast a wide net compared to some of the others in the space. Are they all creating their own systems or are they trying to band together?
The great thing about Liveramp is that they have such tremendous scale. Trying to replace the cookie and become the new de facto identifier that’s used across all these platforms is, I think, really the mission of Liveramp, and I think they’re doing a great job. Building relationships with publishers, leveraging their relationships with advertisers to get them to adopt and standardize on these new ideas and graduate from the cookie system of the past is difficult.
In the middle of all this, of course, are the marketers that actually have to make sense of this and their agencies that have to support them. In my own work with clients and talking to marketers, I think there is this move for marketers to take more control of their own data and that their first party data assets and technology environment will grow in importance.
I’m also seeing this increased sense of urgency among marketers to get ahead of this right now because we only have 18 months before the cookie goes away.
If you think about it as a consumer ID and if I can tie transactions to the mailbox or the inbox, then I should be able to go to these advertisers and be able to measure the success of my campaign and adjust it by the cost of the impression. Whether that’s just attribution, or it’s some sort of incremental based on that impression, that sort of infrastructure is going to have to be in place in order for brands to adapt to a new method. Brands are going to want to make sure they’re getting the same kind of return, and the only way that’s going to going to happen is through measurement. Without the cookie, it’s going to have to depend on first party data tied to transactions and then tying that to impressions.
Dan, what do you see as the future for the ecosystem in the near-term future?
I think data sharing is going to become more and more prevalent. For example, clean rooms are going to be an important new technology, and there will be some companies that become significant in the space, operating these sort of clearing networks. There will need to be an ability for companies to easily bring their data into these clean rooms, share their data, or sell their data to other companies that are in that network, then be used for targeting and for measurement and analytics. As an example, there is Snowflake, which is becoming a massive data sharing platform between different companies. Being able to be compatible in these environments and share data and execute is going to be an important capability for marketers, publishers, data owners and really, everyone in the ecosystem.
Todd, what do you see as the future for your world within V12?
I see the walled gardens winning to an extent because they have “bring your own data” offerings which are registration-based matches. And those impressions then rise in value because brands like those services.
What I see in the coming 12 to 18 months is a ton of testing in the open web because impressions are undervalued today. As this new ecosystem develops, brands are going to want to test KPIs, which I sense will be sales related, in order to make sure they are getting fair value.
As customer identity develops based on the mailbox and the inbox to digital impression, we’re going to see the types of measurements that brands have always wanted in the first place, which is tying impression and frequencies directly to sales.
As we help figure out that measurement and those test cases, we’re going to see which sorts of technologies win and which lose. I think it’s going to be a hybrid. Brands may look at one technology such as the aggregate system for an awareness campaign to get low-cost impressions out there. That solution might be great, but for multichannel campaigns, where you’re trying to drive the consumer down the funnel to purchase, consumer IDs will be highly relevant because you want to send a direct mail or an email
With clients taking more active control of their data, I think the CDP category in which we participate is poised to accelerate among the big global market down to the middle market. The CDP market is going to continue to grow in different ways.
Then, just in V12’s own business, we launched Signal’s online for automotive in a cookie-less mode in which we have a syndicated data provider. it’s been different for us and more complex to explain to our clients but the results have been pretty encouraging so far. In closing, it’s really going to be incumbent on marketers, on data owners, on intermediary players, and programmatic players or agencies. We need to keep learning and evolving since there is no one magic formula.
Links to the recorded video discussion can be found below:
Navigating the New Cookie-Less World Part #1 (Panel Discussion)
Navigating the New Cookie-Less World Part #2 (Panel Discussion)